Wednesday, February 27, 2008

We are concerned in this book with that condition of men in which coercion of some by others is reduced as much as is possible in society. This state we shall describe throughout as a state of liberty or freedom. (11)

This definition of liberty or freedom makes it clear that freedom is a relation between men. Freedom is not about having greater possibilities or more things to choose from. I’ve heard or read some who do seem to equate freedom or liberty with a larger range of choices. Hayek also notes that restrictions on or infringements of freedom result from the coercion of some by another or by others. A person’s freedom is not reduced by weather or some physical event in nature, or by an accident that leads to a person being confined to a wheelchair.

This idea of freedom implies a person has a private sphere that means some realm for which the individual can act without the direct interference of others:

Whether he is free or not does not depend on the range of choice but on whether he can expect to shape his course of action in accordance with this present intentions, or whether somebody else has power so to manipulate the conditions as to make him act according to that person’s will rather than his own. Freedom thus presupposes that the individual has some assured private sphere, that there is some set of circumstances in his environment with which others cannot interfere. (13)

The words liberty and freedom are often used in different ways, which of course means the possibility of confusion and misunderstandings. Hayek discusses a dangerous and troubling use of the word liberty, which follows from the point of noting above that freedom is not about more choices and it is not about having the physical ability to do something a person wants to do.

. . .until comparatively recent times few people seriously confused this ‘freedom from’ obstacles, this freedom that means omnipotence, with the individual freedom that any kind of social order can secure. Only since this confusion was deliberately fostered as part of the socialist argument has it become dangerous. Once this identification of freedom with power is admitted, there is no limit to the sophisms by which the attractions of the word ‘liberty’ can be used to support measures which destroy individual liberty, no end to the tricks by which people can be exhorted in the name of liberty to give up their liberty. It has been with the help of this equivocation that the notion of collective power over circumstances has been substituted for that of individual liberty and that in totalitarian states liberty has been suppressed in the name of liberty. (16)

Hayek observes that this use of the word freedom has become accepted in the United States by those on the political left, and he specifically associates this view with J.R. Commons and John Dewey. While these figures are from an earlier generation of intellectuals, their work influenced much of the philosophy of the political left today.

This confusion of liberty with power is especially troubling because it can be used to associate that natural appeal of the word with the call to redistribute wealth:

This confusion of liberty as power with liberty in its original meaning inevitably leads to the identification of liberty with wealth; and this makes it possible to exploit all the appeal which the word ‘liberty’ carries in the support for a demand for the redistribution of wealth. Yet, though freedom and wealth are both good things which most of us desire and though we often need both to obtain what we wish, they still remain different. (17)

Another way of thinking about the meaning of liberty puts things more directly, I think, in terms that relate to government and the individual.

. . . it describes the absence of a particular obstacle – coercion by other men. . . .It does not assure us of any particular opportunities, but leaves it to us to decide what use we shall make of the circumstances in which we find ourselves. . . .it does not exist if one needs permission for most of what one can do. The difference between liberty and liberties is that which exists between a condition in which all is permitted that is not prohibited by general rules and one in which all is prohibited that is not explicitly permitted. (19)

It seems to me this last suggestion relates to a perspective often heard at least in political discussions, and probably also in many academic circles. Some discuss the rights of individuals as though those rights are granted to the individuals by the government. I think this is a view often used to discuss property rights for example, and it seems to me a view which is often used by law professors and legal scholars. It would seem that if government grants rights to individuals, then individuals do not have a right to do something or to take some action unless they have been explicitly granted the right to take that action by government. In contrast is the view that an individual has a right to act as he wants unless that action has been prohibited by general rules. This view seems much more the view Jefferson relied on in writing the Declaration of Independence, and it is much more the view of Locke and many others.

Saturday, February 23, 2008

I see neither well-functioning democracies nor democracies highjacked by special interests. Instead, I see democracies that fall short because voters get the foolish policies they ask for. (p 22)

I'm not far into the book yet. It seems a key foundation for his analysis is the idea that voters have preferences about beliefs concerning how the world works. Voters mostly seem to take their personal preferences about these beliefs as given and they generally devote little attention to checking those beliefs against reality. In particular, voters beliefs about economic issues are taken by Caplan to be systematically wrong.

The implication?

Biased beliefs about economics make democaracy worse at what it does most. (p 21)

Monday, February 18, 2008

Sen. Hillary Rodham Clinton helped secure more than $340 million worth of home-state projects in last year's spending bills, placing her among the top 10 Senate recipients of what are commonly known as earmarks, according to a new study by a nonpartisan budget watchdog group.

Working with her New York colleagues in nearly every case, Clinton supported almost four times as much spending on earmarked projects as her rival for the Democratic presidential nomination, Sen. Barack Obama (Ill.), whose $91 million total placed him in the bottom quarter of senators who seek earmarks, the study showed.

Sen. John McCain (Ariz.), the likely GOP presidential nominee, was one of five senators to reject earmarks entirely, part of his long-standing view that such measures prompt needless spending.

As a campaign issue, earmarks highlight significant differences in the spending philosophies of the top three candidates. Clinton has repeatedly supported earmarks as a way to bring home money for projects, while Obama adheres to a policy of using them only to support public entities.

McCain is using his blanket opposition to earmarked spending as a regular line of attack against Clinton, even running an Internet ad mocking her $1 million request for a museum devoted to the Woodstock music festival. Obama has been criticized for using a 2006 earmark to secure money for the University of Chicago hospital where his wife worked until last year.

This is pretty interesting. Nice to know at least one of the presidential candidates is against the corruption of earmarks.

Thursday, February 14, 2008

"So, incredibly, when the hidden costs of conversion are included, greenhouse-gas emissions from corn ethanol over the next 30 years will be twice as high as from regular gasoline. In the long term, it will take 167 years before the reduction in carbon emissions from using ethanol 'pays back' the carbon released by land-use change. As they say, it's not easy being green.

The second study comes out of the University of Minnesota and the Nature Conservancy and explores what the authors call the 'carbon debt' when native ecosystems are converted to biofuel stock. Until the debt is repaid, biofuels from those fields will be greater net emitters than the fossil fuels they replace. The authors find that the debt for corn ethanol in the U.S. is between 48 and 93 years. In Indonesia and Malaysia, which have a 1.5% annual rate of deforestation to produce palm oil for Western European biodiesel, the debt is as high as 423 years. Yep, that's four centuries. Even Fidel Castro won't last that long."

Wednesday, February 13, 2008

Russell Roberts INTERVIEWS WILLIAM EASTERLY who is the author of two interesting books on economic development: The White Man's Burden and The Elusive Quest for Growth. The interview is about 1 hour long. Much of the interview discusses the ways in which the western economies have not helped developing economies along the path to prosperity, and a good deal of this story reflects poorly on neoclassical economics. I think one very interesting suggestion Easterly makes about doing better in our efforts to help poor economies is that the conceptual framework needs to be changed from the mindset of planner to the mindset of the searcher.

I also have to mention something Roberts said: "The romance of utopia is timeless and enduring." This seems to be true. Too bad.

There is an interesting approach to offering aid to poor countries that was mentioned in the interview. Check out Global Giving.

Tuesday, February 12, 2008

FREDERIC SAUTET offers a list of the presidents who have been most supportive of laissez-faire (in order of most supportive): Grover Cleveland, Martin Van Buren, Andrew Jackson, Thomas Jefferson, Calvin Coolidge, and Ronald Reagan. Only one president makes the cut since 1929.

Taking Leonard Liggio’s list as a benchmark, out of 42 presidents in U.S. history, only six of them can be regarded as true supporters of laissez-faire in one way or another. 1/7 is a pretty small ratio (but it’s probably better than in most other countries in the world). Also, only two of the six were presidents during the 20th century, and they are the least laissez-fairist of the bunch. If the “tendency” were to continue, there shouldn't be any laissez-faire-minded president in the 21st century. Clearly, it appears impossible that any of the current candidates to the U.S. presidency would make it on the list someday . . .

Monday, February 11, 2008

"Thus there is a certain perversity to suggestions that the proper reaction to a potential recession is to enact protectionist measures. While foreign competition may have eroded some American workers’ incomes, looking at consumption broadens our perspective. Simply put, the poor are less poor. Globalization extends and deepens a capitalist system that has for generations been lifting American living standards — for high-income households, of course, but for low-income ones as well."

This is an op-ed piece that points out, for me, how aggregation can make it difficult to have an accurate understanding of the rich and the poor in our country. Of course our system of political economy has been lifting American living standards for generations. But, this seems to often be missed when there are data reported about how much more the top income quintile has versus how little the bottom income quintile has. Cox and Alm explain some reasons why this data can mistakenly portray a picture which is inaccurate. And, their explanation doesn't even utilize the dynamic nature of our economy by which there is significant mobility between income groupings in the data, much less the observation that many in the lowest income quintile are those who are young and very early on in their working years.

Wednesday, February 06, 2008

I heard on the radio this morning that today was President Reagan's birthday. I've been taking a few minutes this afternoon to read a few of President Reagan's speeches, and I ran across a short essay by Milton Friedman in which he explains the following observation:

Few people in human history have contributed more to the achievement of human freedom than Ronald Wilson Reagan.

One of the things I noted in looking at just a few of President Reagan's speeches is that he often talked about freedom and liberty. It seems to me these days that very few of our political leaders speak of freedom and liberty, and except for a brief reference by Mitt Romney in his speech last night, the people with much of a chance to be the next President have pretty much neglected individual liberty in their campaigns and in their views of government.

Sunday, February 03, 2008

Does restricting "eminent domain" -- the power of government to seize private property -- harm economic growth? A new report from the Institute for Justice looks at the evidence and concludes the answer is no.

[. . . .]

This result isn't surprising. Developers love eminent domain because it's easier to snap up land when government forces owners to sell -- no unpleasant dickering over price, etc. Local politicians likewise believe they are best positioned to pick winners and losers and to shape the future of their cities.

But private development went along very nicely for two centuries before politicians began seizing one person's property for the benefit of another private citizen. Sometimes the marketplace adapted in amusing ways, as when major building projects were forced to go up around, or even on top of, older buildings. But in the absence of the coercive state, buildings still got built.

The most grandly conceived plans are also often those most likely to fail. If a project cannot proceed without government interference, it is reasonable to ask whether it is worth putting the hamfist of government on the scales at all. As the Institute for Justice's report notes, Baltimore's much-touted Inner Harbor redevelopment remains dependent on government handouts. At the same time, private redevelopments without eminent domain, such as in Anaheim's A-Town, are thriving.

From the standard economic perspective of efficiency and market failure, the important question is whether there are reasons to believe that parcels of land (especially those that would be taken by the power of eminent domain) will otherwise come to be devoted to something other than their most highly valued uses. In general, I can see no reason to conclude that they will. But, if you do conclude that parcels of land will not come to be devoted to their most highly valued uses, then the important question in all of this is whether there are reasons to believe that the government officials who wield the power to take land from some to give it to others are sufficiently knowing to successfully take land that is not being efficiently utilized and then give it to the person who will put the parcel to the most highly valued use. I'm sure this is very unlikely, and if it happens it would only happen by accident. I conclude that allowing government the power of eminent domain for so-called "economic development" results in significant government failure with respect to an efficient allocation of resources. Therefore, I'm not surprised that restricting government's power of eminent domain with respect to so-called "economic development policy" wasn't found by the research to diminish economic growth.

Now, from the perspective of the words we find written into our Constitution this analysis of eminent domain and efficiency (market failure) would seem to be of little relevance:

. . . nor shall private property be taken for public use without just compensation.

It seems clear to me, but unfortunately not to the Supreme Court, that taking privately owned parcels of land in order that the parcels may be owned by a different private owner is unconstitutional, since after all, the property is not being taken to be put to some public use such as a public highway, or a public park, or a public school. So, if the Supreme Court would stick to the words written in the Constitution (as it was ratified), the issue considered by this research would be of little policy interest. As it is, the research shows that assumptions made by the majority in the Kelo opinion are incorrect, and that the government officials who support such public actions in the name of "economic development" are very likely to fail to accomplish their stated goals. All the while, government's power is being used to take what is supposed to be private property in communities all across our country.

Friday, February 01, 2008

The California Energy Commission has recently proposed amendments to its standards for energy efficiency. These standards include a requirement that any new or modified heating or air conditioning system must include a programmable communicating thermostat (PCT) whose settings can be remotely controlled by government authorities. A thermostat czar, sitting in Sacramento, would be empowered to remotely reduce the heating or cooling of your house during what he deems as an "emergency event."

Say you disagree with the czar's temperature setting for your house, the California Energy Commission is one step ahead of you with the provision: "The PCT shall not allow customer changes to thermostat settings during emergency events." In other words, the thermostat must be configured in a way that doesn't allow the customer to override the czar's decision.

Some people might agree with this level of government control over their lives, but if these amendments become law, you can safely bet there are other intrusive energy-saving proposals waiting in the wing. For now California's energy Nazis are simply testing how much intrusiveness Californians will peaceably accept. I can easily imagine California's Energy Commission requiring remotely controlled main circuit breaker boxes that control all of the electricity coming into your house. That would enable the energy czar to better manage your electricity use.

Say you're preparing a big dinner. The energy czar might decide that you don't need so much heat in the rest of the house. Or, preparing a big dinner might mean the energy czar would turn off the energy to your washing machine and dryer while the electric stove is on.

There's no end to what the energy czar could do, particularly if he enlists the aid of California's Department of Health Services. Getting six to eight hours sleep each night is healthy; good health lowers health costs. So why not make it possible for the energy czar to turn the lights off at a certain hour? California's Department of Education knows children should do their homework after school rather than sit playing video games or watching television. The energy czar could improve education outcomes simply by turning off the television, or at least turning off all non-educational programs. Of course, there could be a generous provision whereby if an adult is present, he could use a password to operate the television.

You say, "Williams, you must be mad. All that would never happen." That's the same charge one might have made back in the '60s, when the anti-tobacco movement started, if someone predicted that the day would come when some cities, such as Calabasas, Calif., would outlaw smoking on public streets. Back in the '60s, had someone predicted that there'd be bans on restaurants serving foie gras; citations for driving without a seatbelt, that the government said would be unnecessary if cars had airbags; and school bans on kids having peanut butter sandwiches in their lunchbox, I'm sure people would have said that would never happen.

California's Energy Commission, along with its legislature, has the power to mandate that all existing -- as well as new -- heating and cooling devices have programmable communicating thermostats by 2009. After all, it's never too early to start saving energy or prepare for an "emergency event." The reason they won't is because they would encounter too much political resistance. Their agenda is far more achievable using techniques dear to all tyrants: There's less resistance if liberty is taken away a little bit at a time.